30&31, July 2017

The ‘Jiyo Parsi’ (Live Parsi) campaign was launched three years ago in 2014, to address the issue of dwindling population of India’s Parsi community

Key facts:

For the first time in the world, there has been an ad campaign to save a community.

The first Jiyo Parsi campaign was mildly controversial, but it helped us grab attention and convinced many.

To point it out from an individuals perspective rather than a community’s.

The campaign was a challenge for us as it meant trying to intrude into someone’s private life. Talking openly about one’s personal choice.

Jiyo Parsi scheme:

Declining population of parsi community in India is a matter of concern. Therefore, “Jiyo Parsi Publicity Phase-1” was initiated in 2013 for containing the declining trend of population of the Parsi community and reverse it to bring their population above the threshold level.

The main objective of the “Jiyo Parsi” scheme is to reverse the declining trend of Parsi population by adopting a scientific protocol and structured interventions, stabilize their population and increase the population of Parsis in India.

Ministry of Minority Affairs’ scheme has two components: Medical Assistance and Advocacy/Counselling.

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Scooping out oil spills made easy

Source: The Hindu

Scientists have developed a simple, cheap and environment-friendly system that can effectively remove crude oil from sea that can pollute and even destroy marine ecosystems. The hydrophobic sorbent developed by scientists can suck up oil and congeal it.

The new system and its benefits:

Scientists developed the hydrophobic sorbent by using a cheap raw material (mannitol) and cellulose pulp as a matrix. (A hydrophobic material automatically becomes oil-loving and takes up oil when it comes in contact with it). Mannitol was converted into a hydrophobic gelator through a one-step process and a solution was made using this compound. Cellulose balls the size of marbles were then dipped in the solution and dried.

The gelator gets adsorbed on the cellulose fibre through hydrogen bonding. This process of adsorption of gelator on the cellulose fibre matrix changes the cellulose matrix from being very hydrophilic (water-loving) to hydrophobic (water repelling). A hydrophobic material naturally becomes oleilophilic (oil-loving).

Unlike other alternatives, the sorbent can be easily applied over oil-water mixture, and no solvent is needed for spraying the gelator thus making it environmental benign. The gelator adsorbed on the surface of cellulose fibre is able to absorb oil when it comes in contact with it.

Once the sorbent sucks the oil, the gelator slowly gets released from the cellulose fibre and congealing of oil takes place. Only when the oil congeals can it be removed without the oil dripping due to gravity.

Congealing of oil becomes possible as the gelator used by scientists self-assembles to form micro fibres and the oil loses its fluidity and gets trapped within the entangled fibrous network to form a rigid gel. Gelation essentially turns the liquid oil phase into a semi-solid one and this allows the fibre balls with the congealed oil to be simply scooped out or removed using a scoop or a sieve.

It takes only about 30 minutes to two hours from the time of application to scooping out the rigid fibre balls containing congealed oil, leaving behind clean water. Studies found that the sorbent was able to absorb and congeal 16 times its own weight of oil. The absorbed oil can be recovered by applying pressure or fractionated by a simple distillation process.

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New gold bond scheme may draw more investors

Source: The Hindu

The Government announced a few changes in its Sovereign Gold Bond (SGB) Scheme recently.

What are the changes?

The primary change was the increase in the limit to 4 kg (from 0.5kg) for individuals, HUF and 20 kg for Trusts. This was probably done to encourage high net-worth individuals, rich farmers as well as trusts to invest in these bonds. The basic premise is that most Indians believe in gold as a time-tested and safe asset class and prefer it over other forms of investment.

The Government also introduced flexibility in the scheme to design and introduce variants to cater to a cross-section of investors.

New Gold Bond Scheme:

The sovereign gold bond was introduced by the Government in 2015. While the Government introduced these bonds to help reduce India’s over dependence on gold imports, the move was also aimed at changing the habits of Indians from saving in physical form of gold to a paper form with Sovereign backing.

Background:

Annual consumption of gold in India is in the range of 700-800 tonnes, almost all of which is imported. Of this, approximately 500-600 tonnes is bought by consumers as jewellery for cultural reasons (mainly for weddings).

The balance is in the form of gold bars and coins for savings or investment purposes, which is what the Government hopes to convert to paper form so that both are served — investors are happy as long as they earn some returns and capital appreciation at the time of redemption, as well as it helps reduce an equivalent amount of physical gold imports.

Key facts:

So far, SGB has been moderately successful with the launch of eight tranches of these bonds since November 2015, garnering approximately ₹5,000 crore or about 16 tonnes of gold. However, the potential to scale up is huge.

The sovereign gold bond initially introduced by the Government in 2015 has achieved only limited success because of its unrealistic pricing pattern vis-a-vis the international price of bullion. Past SGB prices ranging from ₹3,150 per gm to ₹2,750 per gm was often not in parity with the market rate realities and this often led to the SGB consumers losing money, despite earning a 2.5% return on investments.

Another factor diminishing the attractiveness of the SGB is its price being pegged to a 10% import duty, and any reduction in the import duty by the Government in the subsequent period would likely inflict severe loss of value to those who have already invested.

What needs to be done?

The pricing of SGB ideally should be the average of the bullion price of the 60 day-period preceding the issue date of SGB.

To reduce the loss of value to those who have already invested, the Government should fix the pricing of SGB at bullion rates exclusive of import duty and IGST.

To ensure further success, the Government should allow mass channels such as gold loan Non-Banking Finance Companies (NBFCs) to also market it. Gold loan companies have been a credible, customer-facing platform for millions of Indians who trust them and hence it can help the scheme reach many more consumers in urban, semi-urban and rural areas.

Further, offering gold loan against Sovereign Gold Bonds would help popularise the product from a consumer angle. For, it would then be perceived as being as liquid as physical gold. Over time, it would also help reduce various risk factors, such as spurious quality gold, and operational costs linked to manual assessment of gold for gold loan NBFCs.

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Supreme Court allows two broke firms to settle dispute

Source: The Hindu

The Supreme Court, using its extraordinary constitutional powers, has allowed two companies to withdraw from insolvency proceedings and settle their loan dispute despite the case having been admitted by the National Company Law Tribunal (NCLT).

It should be noted here that once the NCLT admits a case for initiating corporate insolvency resolution process under the Insolvency and Bankruptcy Code of 2016, the case cannot be withdrawn even if the parties have decided to settle.

What Supreme court says ?

Article 142 provides that “the Supreme Court in the exercise of its jurisdiction may pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it”.

Just seven months after the operationalization of the Insolvency and Bankruptcy Code (IBC), it has been tested by the Supreme Court with its latest judgment. The policy underlying IBC shifts the incentive of the parties from individual recovery actions to collective action. In that context, after a petition has been filed in NCLT, allowing out-of-court bilateral settlement between the borrower and one creditor may contradict that basic objective of collective action.

After the admission of the petition, it acquires the character of representative suit and through publication in newspapers, other creditors get a right to participate in the insolvency resolution process and therefore IBC does not allow the petition to be dismissed on the basis of a compromise between the operational creditor and corporate debtor.

National Company Law Tribunal:

National Company Law Tribunal (NCLT) is a quasi-judicial body that will govern the companies in India. It was established under the Companies Act, 2013 and is a successor body of the Company Law Board.

NCLT will have the same powers as assigned to the erstwhile Company Law Board (which are mostly related to dealing with oppression and mismanagement), Board for Industrial and Financial Reconstruction (BIFR)(revival of sick companies) and powers related to winding up of companies (which was available only with the High Courts).

The setting up of NCLT as a specialized institution for corporate justice is based on the recommendations of the Justice Eradi Committee on Law Relating to Insolvency and Winding up of Companies.

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Pakistan yet to transition fully to MFN status for India

Source: Indian Express

Under MFN, a WTO member country is obliged to treat other trading nation in a non-discriminatory manner, especially with regard to customs duty and other levies.

Pakistan is yet to award the most favoured nation (MFN) status to India and it maintains a negative list of 1,209 items which are not permitted to be imported from India.

Key facts:

As per a World Trade Organisation (WTO) rule, every member of WTO requires to accord this status to other member countries.

India has already granted this status to all WTO members including Pakistan.

Under MFN, a WTO member country is obliged to treat other trading nation in a non-discriminatory manner, especially with regard to customs duty and other levies.

The neighbouring country allows only 137 products to be exported from India through Wagah/Attari border land route. The bilateral trade between the countries stood at $ 2.28 billion in 2016-17. India mainly exports cotton, dyes, chemicals, vegetables and iron and steel wehile it imports fruits, cement, leather, chemicals and spices.

Most Favoured Nation:

MFN status is a method of preventing discriminatory treatment among members of an international trading organization. MFN status provides trade equality among partners by ensuring that an importing country will not discriminate against another country’s goods in favor of those from a third.

Concept:

MFN concept is an integral part of the WTO agreements and is among the principles forming the foundation of the multilateral trading system.

As per the WTO, whenever a country brings down a trade barrier or liberalises a sector, “it has to do so for the same goods or services from all its trading partners — whether rich or poor, weak or strong.” However, exceptions allowed to this rule include free trade pacts and special benefits to poor nations.

The MFN status was accorded in 1996 as per India’s commitments as a member of the World Trade Organisation (WTO). According to the MFN principle of the WTO’s General Agreement on Tariffs and Trade (GATT) — to which India is a signatory/contracting party — each of the WTO member countries (including India and Pakistan in this case), should “treat all the other members equally as ‘most-favoured’ trading partners.”

According to the WTO, though the term ‘MFN’ “suggests special treatment, it actually means non-discrimination.”In the wake of the deadly attack on Indian soldiers in Uri, an incident for which India is holding Pakistan responsible, there have been calls in India for tough action against its neighbour, including the revocation of the MFN status.

Trade between South Asian among India Export to Pakistan:

Bilateral trade between the two South Asian neighbours was just $2.6 billion in 2015-16 (of which $2.2 billion constituted India’s exports to Pakistan) — which represented a minuscule 0.4 per cent of India’s overall goods trade worth $643.3 billion in the same year.

Impacts:

Therefore, even if India revokes the MFN status it would only have a “symbolic” impact.

On the other hand it would hit India’s exports to Pakistan if there are retaliatory actions and it could also result in India losing goodwill in the South Asian region (where it enjoys a trade surplus and is a party to a free trade pact called SAFTA, which also includes Pakistan). The move may also not go down well at the WTO-level.

No bar on WTO trade dispute restrictions:

After the Uri attack India could consider making use of a ‘security exception’ clause in the GATT to deny the MFN status to Pakistan or bring in certain trade restrictions.

This is because Article 21(b)(iii) of GATT states that :

Nothing in this Agreement shall be construed to prevent any contracting party (including India in this case) from taking any action which it considers necessary for the protection of its essential security interests taken in time of war or other emergency in international relations.

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